When you see athletes in their element — running the field or making a touchdown — they look invincible. But even though these pros appear unstoppable during a game, the truth is that they need financial fitness as much as anyone else.
LESSON #1: EVERYONE NEEDS A COACH
Our culture places athletes on a high pedestal, but they are just people with a job to do. Unfortunately, lack of financial knowledge cuts across age, race, gender, salary, and even career path. At 21 years old, rookie professional athletes are expected to manage millions of dollars, but the statistics show that most Americans lack the skills to effectively manage their finances. Only 24 percent of millennials demonstrate basic financial literacy, according to a recent study from the National Endowment for Financial Education.
Society puts the expectation on athletes that they should know how to do all of this — establish a budget, invest wisely, create a will, and hire a financial advisor. But did any of us know this at 21 years old? Probably not. In reality, we all need this education because we probably didn’t get it growing up. According to a recent report, only one-third of states require graduating high school students to have taken a personal finance class. In my experience, whether working with executives, laborers, or athletes, all employees can benefit from financial wellness coaching.
LESSON #2: YOU NEED A GAME PLAN
Athletes don’t go on the field without a game plan, and they shouldn’t go into their finances without one either. Whether coaching rookies or veterans, I emphasize having a plan in place to budget, create financial goals, and prioritize savings.
Many professional athletes will come into their wealth without any idea of what to do with it. They’ve probably heard that it’s important to focus on retirement, but the reality is that retirement comes much sooner for athletes than the average worker. Their career lifespan is short — less than four years on average — so they really have to accelerate their financial understanding. When they leave professional sports they are often in their mid-twenties and take a substantial pay cut. Retirement looks a lot different for young athletes, and that’s why a financial game plan is so important. They have a wonderful financial opportunity that they work really hard for, and with proper planning it shouldn’t have to end when they stop playing.
LESSON #3: BE CAREFUL WHO YOU PUT ON YOUR FINANCIAL TEAM
No one cares about your money more than you do, so I’ve learned that it’s important for professional athletes — and all of us — to choose the members of our financial team carefully. I tell athletes that they can’t just hand their money off to others and expect it to be protected in the way they would for themselves. That’s why it’s important to have a base level of financial literacy. You don’t have to be an expert, but you do need to know the basics in order to protect yourself from being exploited. It’s also important to have a financial mentor in your life; someone with financial maturity who you respect and who you can trust will give sound, objective advice.
LESSON #4: DON’T GET CONSUMED WITH IMAGE
One of the most common pitfalls that I talk about during financial bootcamp is the “keeping up with the Joneses” mentality. If you’re looking in your neighbor’s window, it might look great while the blinds are up, but you have no idea what is actually going on once the blinds go down. People can project a wealthy image, but it doesn’t necessarily mean they are as financially fit as they appear. If you surround yourself with friends who are overly-concerned with image, then you might get sucked into that attitude as well.
LESSON #5: SET BOUNDARIES AND EXPECTATIONS
Some of the hardest moments of managing finances involve dealing with other people who have their own agenda, ideas, and expectations about your money. This is often amplified for young professional athletes because many of them are the first in their family to become a high income-earner. I teach them that they need to set boundaries early and often.
If you get a financial request from a family member or friend, or are tempted by an advertisement, give yourself a day or two to think about it. Look at your budget and think about the long-term impact that your decision will have on your goals. And remember, the only people who will get upset about boundaries being set are those who benefit from you having none.
LESSON #6: PRACTICE MAKES PERFECT
All athletes have the skills required to successfully manage their finances. They’ve demonstrated that they work hard, have discipline, and are willing to make sacrifices. But beyond that, they are willing to learn. These are the habits and characteristics that got them to where they are in their sports career, and these are the exact traits that people need to successfully manage their finances. You have to take the skills from wherever you have been successful and apply them to your finances with that same determination.
Athletes regularly watch recordings of their games. They continually check their performance so they can improve, and that’s what makes them great. Similarly, it’s important to make time to review your finances and get hands-on with your money.